Morgan Stanley 2015 Annual Report Download - page 197

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
recoverable, which is recorded in Compensation and benefits expense. At December 31, 2015, the Company had $4,923
million of employee loans, net of an allowance of approximately $108 million. At December 31, 2014, the Company had
$5,130 million of employee loans, net of an allowance of approximately $116 million.
8. Equity Method Investments.
Overview.
The Company has investments accounted for under the equity method of accounting (see Note 1) of $3,144 million and
$3,332 million at December 31, 2015 and December 31, 2014, respectively, included in Other investments in the
consolidated statements of financial condition. Income from equity method investments was $114 million, $156 million and
$451 million for 2015, 2014 and 2013, respectively, and is included in Other revenues in the consolidated statements of
income.
Japanese Securities Joint Venture.
The Company holds a 40% voting interest (“40% interest”) and Mitsubishi UFJ Financial Group, Inc. (“MUFG”) holds a
60% voting interest in Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (“MUMSS”). The Company accounts for its
equity method investment in MUMSS within the Institutional Securities business segment. During 2015, 2014 and 2013, the
Company recorded income from its 40% interest of $220 million, $224 million and $570 million, respectively, within Other
revenues in the consolidated statements of income. At December 31, 2015 and December 31, 2014, the book value of this
investment was $1,457 million and $1,415 million, respectively. The book value of this investee exceeds the Company’s
share of net assets, reflecting equity method intangible assets and equity method goodwill. In addition to MUMSS, the
Company held other equity method investments that were not individually significant.
In 2015 and 2014, MUMSS paid a dividend of approximately $424 million and $594 million, respectively, of which the
Company received its proportionate share of approximately $170 million and $238 million.
Summarized Financial Data for MUMSS.
At December 31,
2015 2014
(dollars in millions)
Total assets .................................................... $ 135,398 $ 111,053
Total liabilities ................................................. 132,492 108,263
Noncontrolling interests .......................................... 29 37
2015 2014 2013
(dollars in millions)
Net revenues ................................................... $ 2,961 $ 2,961 $ 3,305
Income from continuing operations before income taxes ................ 845 908 1,325
Net income .................................................... 589 595 1,459
Net income applicable to MUMSS ................................. 565 582 1,441
9. Goodwill and Net Intangible Assets.
Goodwill.
The Company completed its annual goodwill impairment testing on July 1, 2015 and July 1, 2014. The Company’s
impairment testing for each period did not indicate any goodwill impairment as each of the Company’s reporting units with
goodwill had a fair value that was substantially in excess of its carrying value. However, adverse market or economic events
could result in impairment charges in future periods.
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